SBA Loan - length of property lease and loan term

May 26, 2023

by a searcher from University of Washington Bothell - School of Business in Seattle, WA, USA

Hello - Looking to gain some insight. I came across this info that states your the SBA loan term cannot be longer than the property lease with your landlord. If your lease term is 7 years and you have the option to renew for 5 years, will SBA provide a 10 year loan term? Thank you!

"A common issue we see is related to the length of the lease on the location. The lease term must be at least as long as the SBA loan , which can be a 10-year loan. When purchasing an existing franchise, the length of time on a lease is often less than 10 years. This doesn’t prevent you from getting an SBA loan, you simply need to renegotiate the lease before you can close. If the cost of the lease is significantly higher upon renegotiation, that affects cash flow and your ability to get an SBA loan."
https://www.sba7aloanqualify.com/faqs-sba-7a-loans#:~:text=The%20lease%20term%20must%20be,lease%20before%20you%20can%20close.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I concur with Tyler. So long as there is an existing lease term or a lease with options (so long as they are tenant options) that works. Further, I have done several deals where the landlord was not willing to extend the lease or the buyer did not want to extend the lease because they knew they needed more space. If we can verify there is other space readily available in the market and there is a need to move the business, or that the space the business is in is not vital to the operations of the business, we have successfully gotten this conditioned waived before. Should you have any additional question on this item or any others, you can reach me here or directly at redacted Good luck.

Reply by a lender
from University of Central Florida in Tampa, FL, USA

Hi Justin, as long as the lease term and renewal options are equal to or greater than your loan term (10 years) then you are fine. The scenario you described above is a perfect example of that. Lenders also have discretion to accept a lease term shorter than the length of the loan, but it's all dependent on loan type and ease of move for you as the borrower.

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